A three-digit number holds one of the most important pieces of financial data there is about you: your credit score. Lenders use the score to assess how much of a risk you are. It also helps determine whether or not you’ll be approved for credit and how much you’ll pay in interest on credit cards, mortgages, auto loans and more. Your credit score can affect other factors too, such as the size of your security deposit and how much you’ll pay in fees when renting an apartment.
The most common credit score is the FICO score, which is calculated using various bits of data – both good and bad – from your credit report. This includes your payment history (35% of the score), how much you owe (30%), the length of your credit history (15%), the types of credit you use (10%) and how many new lines of credit you have (10%). (For more, see Credit Score Ranges: What Do They Mean?)
Traditionally, you had to pay to find out your credit score, and even then it might be an "educational score," which is a guess of your FICO score and not the actual score that lenders use. Since 2013, however, FICO has allowed lenders to make the actual score available to consumer for free through its FICO Score Open Access program. And since it’s a soft inquiry, checking won’t affect your credit score.
Approximately 100 million people can now get their credit scores through the program, and FICO expects that number to grow as they move beyond the largest financial institutions, adding credit unions, community banks and smaller organizations.
Check Your FICO Score for Free
As of March 2016, a growing number of banks and other financial institutions participate in the FICO Score Open Access program to offer customers their FICO scores for free, including:
Bank of America Corp
Discover Financial Services
Hyundai Capital America
JPMorgan Chase & Co
Pentagon Federal Credit Union
State Employees' Credit Union (based in North Carolina)
In many cases, you can access your FICO score by logging into your account online or via the bank's app. In some, you will receive your FICO score once a month when you receive your monthly statement.
Check Your Credit Report, Too
A credit report is a detailed report of your credit history. Like your credit score, lenders look at your credit report to determine your creditworthiness. It’s a good idea to review your credit report periodically to manage your personal finances and to check for mistakes: A credit report is often the first indicator that you’ve been the victim of identity theft. (For more, see How to Guard Yourself Against Identity Theft.)
By law, you are entitled to one free, annual credit report from each of the big three credit reporting agencies: Equifax, Experian and TransUnion. If you stagger your requests, you can get a credit report once every four months (instead of at the same time), so you can keep an eye on your credit report throughout the year. There is only one place to get your free, federally mandated report: AnnualCreditReport.com. (For more, see What’s on a Consumer Credit Report?)
The Bottom Line
Your credit score affects your ability to obtain credit and the terms you’ll be offered, such as the interest rate on a mortgage. It can also impact your job opportunities (employers often run credit checks), your housing options (landlords also run credit checks) and the rate you pay for auto and homeowners insurance. Since this one number is so important, it’s a good idea to keep track of it. Thanks to the FICO Score Open Access program, that’s gotten a lot easier.